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Friday, May 7, 2010

Japan held its stock market to only a 3% drop Friday by openly dumping two trillion Yen into the market (about $21 B). European markets didn’t do as well and were down as much as 4%. The DOW dropped 300 points early but clawed back up to only 140 points down.

The “facts” from yesterday’s panic are getting stranger as the data is analyzed. It seems six stocks plunged from respectable prices to a pennies and at least one rose to 100 times its normal price. Regulators can and will void anomalous trades. They are said immediately that there is nothing wrong with the system but hacking must come to mind.

The SEC is on Thursday’s market plunge like a hen on a June bug suspecting that somebody made a killing by driving down Proctor & Gambles stock. Perhaps Wall Street wasn’t aware that the SEC is now run by Democrats who have blocked the porn sites on the agency’s computers so there is now bandwidth available to track illegal trades and crack down on market manipulation.

Wall Street was probably calmed somewhat today by the positive job numbers even though they prefer higher unemployment, they are starting wonder if the villagers will come with torches instead of bail outs. They’ve had several of their banks burned in Greece.

Republicans are now seeing their “where are the jobs” chant go the way of “drill baby, drill” and those death panels have yet to materialize. Obama’s successful diplomacy with the Chinese has slowed the exodus of US jobs with China freezing the expansion of factories aimed at exporting to the US and they’ve promised currency reform. Wall Street is floating the rumor that China will renege on that policy with the Greek debt crisis looming but there is no indication from the Chinese that they will. It wouldn’t seem likely to serve China’s interest to change course after all the considerable effort they have applied to shift the dragon to domestic growth.

The 290,000 new jobs sound good but that only covers two months of population increase. It will take twelve years at this rate to replace the jobs lost in the last two years. Since there are plans to layoff 300,000 teachers at the end of May we aren’t gaining much. Big business doesn’t plan to bring back jobs and small business is being squeezed out by big business through imports, out sourcing and wage suppression. Reform will only come when the villagers are mad enough to pay attention to the castle. www.prairie2.com

Thursday, May 6, 2010

A drilling platform at the corner of Wall Street and Broadway exploded and sank today with sticky red ink spreading across the land. It is impossible to estimate the damage this will do as it begins to wash up on Main Street. Senator John Kyle of Arizona denied that any Republican in the Senate ever favored more financial drilling, “Some candidate may have had said something two or three years ago like ‘the fundamentals of the economy are sound’ but that was never our policy”.

The real story is nearly as bizarre; it’s been reported that human traders on the floor just stood and watched as the market fell over a thousand points in less than five minutes. There is a circuit breaker that is currently set at the 1050 point decline to suspend computer trading for an hour but there is no admission so far of that happening. Incredibly they are circulating the rumor that this panic was triggered by a futures trader on the Chicago Board of Trade incorrectly selling 16 billion dollars of an exotic instrument instead of 16 million. This seems a bit far fetched, are they really describing a “blow out“? (didn‘t Halliburton cement the trade properly?).

It’s more likely that the USD reaching new highs thanks to Standard & Poors hyping the Greek bond crisis that has triggered margin calls. You see the USD now need to be repaid at a higher rate than when they were invested in a different currency. We do know that Proctor & Gambles and 3M stock fell by half in just five minutes before coming back. With trillions in Fed money on loan to the Wall Street banks at zero interest pumping up world markets through the carry trade, it was only a question of time before panic occurred. Asian markets have experienced steep declines on a daily basis and Europe has been as well with fears over the collapse of the Euro.

The fact that the market “rebounded up” to only 350 points down means little. Wall Street banks could easily drive the market back up before the close as trading would be light unless a full-fledged panic took hold and traders were willing to sell at any price. It is even possible for the Fed and Treasury to pump cash into the market directly in order to intervene and preventing a crash using authority developed after the Reagan market crash. It’s been rumored that there was a lot of this done under Bush to try and hold off another crash until after he left office. You see there really is no free market under capitalism, the capitalists would never stand for it, crashes are okay for the rest of us though. www.prairie2.com

Wednesday, May 5, 2010

An ongoing study of unemployed people conducted by Rutgers University has found that only 21 percent of those who were recently out of work as of last August had found work by this March. Two-thirds remained “unemployed” by the government’s count and the rest of the jobless had either gone back to school or retired early. Of those who are working, only 13% have full-time jobs and most have taken substantial cuts in pay and benefits to get those.

That’s 13% of 21% of the people surveyed had a full-time job. The math on this comes out to 2.73%. In other words out of every thousand who were jobless last August only 27 people have found full time jobs and that doesn’t mean a good job either, can you say “Fries with that?” For older workers the numbers were almost twice as bad, “Welcome to Wal-Mart”.

The number of people who have been looking for work for more than six months has jumped from 48% to 70% since August with 414,000 added just in March. Contrary to the rightwing talking point that says people are staying unemployed for the free money, only 40% of the jobless in August were eligible for benefits. To continue living, 70 percent were spending retirement funds, 56 percent borrowed money from family or friends and 45 percent ran up credit cards to get by. Forty-two percent skimped on medical care, 20 percent moved in with family or friends and 18 percent had visited a soup kitchen. Ninety percent rate their financial situation as fair at best and more than half now describe themselves as being poor.

Over half of the unemployed have lost their jobs for the first time even though 72% believed that their jobs had been permanent. The axe dropped suddenly with eighty percent receiving notice of two weeks or less. Just 15% of the unemployed received any severance pay, and virtually none were offered retraining for another job.

Eighty percent do not believe there is any chance of returning to their jobs. Seventy five percent say they would take a cut in pay to return to work and a similar number would be willing to change careers. Only half have even been granted an interview. A quarter of workers were making more than 75,000 a year but the American dream is now gone. There are millions of people who have used up all reserves and their situation is only getting worse. www.prairie2.com

Tuesday, May 4, 2010

World stock markets all dropped as much as 3% today including in the US but not Japan. The Greek tragedy is one reason, ironically because they have been bailed out and will not default. The problem is the onerous if not draconian austerity imposed on Greece by the invisible hand of the IMF. These destroyers of people’s lives across the planet are moving to put the Greek middle class in permanent serfdom.

This in itself is not moving the markets but the realization that the neo-cons will move to the next weakest economy either Portugal or the much larger Spain and create similar destruction there. By selling naked shorts on government bonds they will destroy their ability to borrow and force them to seek a bailout and accept similar terms. The reduction of buying power will deepen the recession and spread the contagion further.

Asian markets were down sharply but not so much from the loss of markets in the PIGS countries but from China’s restriction of bank lending. This is expected to lead into China allowing its currency to weaken and this is good news for Japan so its market was up. The moves that China makes do heavily impact the DOW 30 as 60% of their business is foreign derived. Commodities including oil fell on the prospect of a widening decline in business activity.

Main street should benefit from China restricting exports to the US but our economy is already hollowed out so it will take more than a 20% currency adjustment to have much effect. China did an adjustment this size a couple of years ago but reversed the policy after the banking crisis.

In AZ the unindicted crony of Jack Abramoff, Republican Senate candidate JD Hayworth has declared that a “buy-cott” from conservatives will offset anything those damn liberals can do. Will this consist of conservatives traveling to AZ to buy sheets made in China or will they just patronize service businesses that depend on cheap immigrant labor?

Hayworth is really going for broke as he will be completely dependent on voter suppression to get elected. Well not quite, the new Governor Frau Brewer used to be Sec of State where she not only suppressed 100,000 brown votes by arbitrarily cancelling their voter registrations but has kept in place the “no humans required” touch screen voting machines to provide the “right” vote count. Brown people are welcome to stay in AZ as long as they work cheap and don’t vote. Predatory capitalism and democracy don’t mix, sort of like crude oil and the salt water marsh. www.prairie2.com

Monday, May 3, 2010

China’s central bank surprised everybody over the May Day holiday weekend by announcing another increase in capital requirements for banks, the third this year. This drastically cuts lending and is being seen as a move to control domestic inflation in advance of allowing the Yuan to rise against the USD. This would produce a tariff like increase on things the US imports from China while in theory giving exports to China from all its trading partners a boost. Don’t plan on an increase in US exports to China since their economy is tightly controlled, the “invisible hand” that the Neo Cons claim regulates the market for all things is in China an iron fist. China has a China first policy. America has a Wall Street first policy.

The Wall Street bankers version of the iron fist is to move massive amounts of money around overwhelming the little guy. China isn’t shy about doing this either since they have a 2.5 trillion surplus to work with but they also back up their financial moves with strict controls or even blunt force to get what they want done. Sort of like Dick Cheney’s Iraq oil policy.

Speaking of oil, Wall Street is planning to drive oil back up to a hundred USD a barrel courtesy of the current disaster. So far, two rigs have had to shut down because of the growing threat of spreading oil. They are also trying to hype the prospect that drilling might actually be regulated. The truth is that there is a glut of oil and the price should go back to pre-Dick Cheney levels but until the Wall Street banks are brought under control that isn’t likely.

The FDIC broke new ground Friday with the failure of three large banks in Puerto Rico, the first since the S&L debacle of the elder Bush’s regime. These three banks closing alone will cost us 5.28 Billion USD. They also closed a bank in Everett WA at a cost of 1.37 Billion USD and another in Port Huron MI for a mere 615 million. A state charted bank in Creve Coeur, Missouri cost just chicken feed of 51 million.

The total bill for last Friday’s closings alone was 7.5 billion, the state of Ohio is trying to slash 8 billion from its budget by cutting workers pay by 10 days a year. This is enough to push many of them out of the middle class and does nothing for the economy but make things worse. The invisible hand has us by the throat. www.prairie2.com

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